Walton Company measured its quality costs for the past two years and summarized those costs using the four categories shownbelow:Prevention costsAppraisal costsInternal failure costsExternal failure costsRequired:Last YearThis Year$ 389,100$ 669,500$ 467,300$ 545,000$ 837,400$ 465,000$ 1,100,000$ 612,0001. Calculate the total cost of quality last year and this year.2. For last year, calculate the cost in each of the four categories as a percent of the total cost of quality.3. For this year, calculate the cost in each of the four categories as a percent of the total cost of quality.4-a. Calculate the change in total cost of quality over the two-year period.4-b. Is performance trending in a favorable or unfavorable direction?Complete this question by entering your answers in the tabs below.Required 1 Required 2Required 3 Required 4A Required 4BCalculate the total cost of quality last year and this year.Total cost of qualityLast YearThis Year

Walton Company Quality Cost AnalysisThis analysis examines Walton Company's quality costs for the…

Answered: Walton Company measured its quality…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Charles Berkle is the manager of Nogain Manufacturing and is interested in doing a cost of quality analysis. The following cost and revenue data are available for the most recent year ended December 31: Sales revenue Cost of goods sold Warranty expense Inspection costs Scrap and rework Product returns due to defects Depreciation expense Machine maintenance expense Wage expense Machine breakdown costs Estimated lost sales due to poor quality $ 250,000 140,000 22,000 14,000 7,800 6,000 10,000 3,400 35,000 4,000 5,000 Required: a. Classify each of these costs into the four quality cost categories and prepare a cost of quality report for Nogain. b. What percentage of sales revenue is being spent on prevention and appraisal activities? c. What percentage of sales revenue is being spent on internal and external failure costs?
Activity-Based Costing Steampunk Corporation has the following predicted indirect costs and cost drivers for 2019 for the given activity cost pools: FabricationDepartment FinishingDepartment Cost Driver Maintenance $ 36,000 18,000 Machine hours Materials handling 54,000 27,000 Material moves Machine 126,000 9,000 Machine setups Inspections - 45,000 Inspection hours Total $ 216,000 $ 99,000 The following activity predictions were also made for the year: FabricationDepartment FinishingDepartment Machine hours 5,000 2,500 Material moves 1,500 750 Machine setups 350 25 Inspection hours - 500 It is assumed that the cost per unit of activity for a given activity does not vary between departments. Steampunk's president, Abner Punk, is trying to evaluate the company's product mix strategy regarding two of its product models, SW100 and SG150. The company has been using a company wide overhead rate based on machine hours but is considering…
H4.
In response to intense foreign competition, Florex Company has taken steps to improve the quality of its products. A summary of its quality costs (in thousands) over the past two years is given below: Last Year Inspection $ 765 $ 1,584 $ 540 $ 675 $630 $ 225 $ 1,260 $ 1,620 $O $ 225 $ 1,710 $ 1,170 $ 45 $ 81 $ 630 $ 900 $ 4,140 $ 1,260 $ 540 $ 1,530 $ 900 $ 1,440 $ 2,700 $ 990 Disposal of production defects $ 900 $ 900 Sales have been flat over the past few years, at $90,000,000 per year. Required: 1. Prepare a quality cost report for this year and last year. Quality engineering Depreciation of test equipment Rework labor Costs (in thousands) This Year Statistical process control Cost of field servicing Supplies used in testing Systems development Warranty repairs Net cost of scrap Product testing Product recalls
In response to intense foreign competition, Florex Company has taken steps to improve the quality of its products. A summary of its quality costs (in thousands) over the past two years is given below: Inspection Quality engineering Depreciation of test equipment Rework labor Statistical process control Cost of field servicing Prevention costs: Total prevention costs Appraisal costs Total appraisal costs Internal failure costs: Total internal failure costs External failure costs: Costs (in thousands) Last Year This Year $ 630 $ 918 $ 540 $ 720 $ 180 Supplies used in testing Systems development Warranty repairs Net cost of scrap Product testing Product recalls $ 720 $ 990 $ 2,610 Disposal of production defects $ 900 Sales have been flat over the past few years, at $90,000,000 per year. Required: 1. Prepare a quality cost report for this year and last year. Note: Enter amount values in thousands. Round your percentage answers to 2 decimal places (i.e 0.1234 should be entered as 12.34).…
Hardev
Cost of quality Elijah Electronics makes wireless headphone sets. The firm produced 76,500 wireless headphone sets during its first year of operation. At year-end, it had no inventory of finished goods. Elijah sold 71,910 units through regular market channels, but 765 of the units produced were so defective that they had to be sold as scrap. The remaining units were reworked and sold as seconds. For the year, the firm spent $408,000 on prevention costs and $204,000 on quality appraisal. There were no customer returns. An income statement for the year follows. Sales Regular channel Seconds Scrap Cost of goods sold Original production costs Rework costs Quality prevention and appraisal Gross margin Selling and administrative expenses (all fixed) Profit before income taxes $14,382,000 363,375 26,775 $14,772,150 $4,889,880 107,100 612,000 $5,608,980 $9,163,170 2,499,000 $6,664,170 a. Compute the total pre-tax profit lost by the company in its first year of operations by selling defective…
Quality costs indices are often used to measure costs of quality relative to some financial measure, such as percent of sales. The following information on sales and quality costs were incurred in December 2023: Sales $350,000 Materials Inspection $23,500 Direct Materials Costs $80,000 Direct Labor Costs $35,000 Batch Sampling Costs $6,400 Scrap and Rework Costs $16,800 Cost of Returns and Warranty $14,200 What is the quality of cost index? Answer in decimal format (i.e. 0.XXX)
Solve the word problem for the portion, rate, on base. A quality control process finds 25.6 defects for every 6400 units of production. What percent of the production is defective? 40 Ex %
20. Bernadette Manufacturing Company is a new company that needs to make a decision about the method to use in adjusting cost of goods sold. Because the company used a budgeted indirect-cost rate for its manufacturing operations, the amount that was allocated (P100,000) was different from the actual amount incurred (P112,500), Ending balances in the relevant account were: Work-in-process Finished goods Cost of goods sold P20,000 40,000 340,000 What is the correct journal entry to write off the difference between allocated and actual overhead directly to cost of goods sold? Manufacturing overhead allocated Cost of goods sold Manufacturing overhead control P100,000 P12,500 a. P112,500 Manufacturing overhead control Cost of goods sold Manufacturing overhead allocated Manufacturing overhead allocated Cost of goods sold Manufacturing óverhead control Manufacturing overhead allocated Work-in-process Manufacturing overhead control P100,000 12,500 b. P112,500 P100,000 P340,000 с. P440,000…
Q.Magill is considering the following changes: (a) introducing quality-improvement programs whose net effect will be to reduce rework and expediting costs by 40% and materials and labor costs for servicing machine tools by 5%; (b) working with suppliers to reduce materials-procurement and inspection costs by 20% and materials-handling costs by 30%; and (c) increasing preventive-maintenance costs by 70% to reduce breakdown-maintenance costs by 50%. Calculate the effect of programs (a), (b), and (c) on value-added costs, non-value-added costs, and total costs. Comment briefly.
Dd3. For the most recent year, Petunia Company had the following data for its Clarkston Division, an investment center: total contribution margin—$671,110 budget, $695,741 actual; controllable fixed costs—$298,900 budget, $295,702 actual. Average operating assets for the year were $1,959,045. Determine the actual return on investment.

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